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August 2, 2010
www.usedcarnews.com
UNDER FIRE
Dealers Face Challenges When Selling to Military Personnel By Ted Craig
Every issue is a matter of national security in today’s political climate. So it’s little surprise that advocates of new regulations for automotive finance portray dealers as shady operators heartlessly preying on vulnerable servicemen. These portraits featured in a variety of publications from the New York Times to Parade Magazine. There are some unethical dealers and they have greatly mistreated servicemen in some cases. But the incidents are far less common, according to data from the National Automobile Dealers Association. The NADA studied data on incidences of abuse during the recent finance reform data and found no evidence of widespread abuse. Joe Falk has been selling to the military for four decades at his Little Joe’s Autos in Chesapeake, Va. Falk has heard no complaints from his customers. “The military people we get in here are not indicating that,” he said.
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Part of the reason for that is the Military Appreciation Program, or MAPP. This is a joint effort by the Virginia Independent Automobile Dealers Association, the Armed Forces Disciplinary Control Board and the Hampton Roads Better Business Bureau. The program’s goal is to make every deal involving military personnel as transparent as possible, said Virginia IADA lobbyist David Boling. MAPP paperwork even includes a price estimate based on either Kelley Blue Book or NADA Used Car Guide. Boling said the dealer isn’t required to sell at that price, but it gives the serviceman some idea of what’s fair. The dealers do their part to promote MAPP, Boling said, but the military could do a better job. Information is supposedly posted in dining areas and included in base orientation. But sailors and soldiers still come onto lots unaware of the program. The program is a success despite these challenges, Boling said. So much so the Virginia IADA is expanding it to Richmond and the Department of Defense is considering a national version. The formal cooperation between dealers and the military may be greater today, but the informal cooperation isn’t what it used to be, Falk said. Falk once could call a serviceman’s commanding officer if there was a problem with payments and the officer would work to resolve it. That rarely happens now. The type of people in the military has changed.
Photo by Heather Hughes Ostermaier ON DEFENSE: Joe Falk, owner of Little Joe’s Auto Sales in Chesapeake, Va., welcomes sailors and soldiers from nearby bases to his store. Lately, dealers who sell to service members faced criticism.
“The military today has a lot of people who joined to get a steady paycheck,” Falk said. Many of these servicemen would be buy-here, pay-here customers if they were civilians. But because they wear a uniform, the rates dealers like Falk charge them become cause for claims of abuse. There have been attempts in the past to dictate the interest rates for servicemen, said attorney Larry Young. Those often backfire.
For example, Louisiana once capped the usury rate for servicemen at 6 percent. That resulted in dealers around Camp Lejeune refusing to sell cars to the base’s Marines. Military personnel already have more protections than the average citizen. Each base has a judge advocates general office that provides free legal services. Local officials usually listen carefully to complaints from the military, as well. “In most base communi-
ties, their bread and butter depends on the military,” Young said. Base commanders can declare any business deemed unethical as off-limits. Some dealers woo servicemen by turning their dealerships into recreation centers. They provide pool tables and staff their stores with scantily clad women. “I’ve got nothing against somebody doing that, but sometimes they step over the line,” Falk said.
IN THIS ISSUE • General Motors Co. buys AmeriCredit Corp. – Page 3
• Dealers need to post prices at their stores. – Page 16
• Online commerce continues expanding – Page 8
• Marketers show how to stand out from the crowd. – Page 18
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